Interim rule lowers contractor salary cap to $487,000

Jun. 24, 2014 - 06:00AM
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An interim rule would lower the cap on contractor reimbursements for executive salaries. Here, Shawn Walsh, an Agile Manufacturing Technology team leader at Army Research Laboratory, and Mike Thompson, an ARL contractor technician, unfurl a lightweight ballistic material for integration into body-armor processes. (Conrad Johnson / U.S. Army)

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The maximum amount federal contractors can reimbursement for employee salaries dropped from $952,000 to $487,000 a year, under an interim rule published June 24.

The rule stems from the December 26 passage of Bipartisan Budget Act of 2013, which called for the limit to be imposed within 180 days.

The interim rule will apply to all contracts awarded on or after June 24. The rule allows for agency chiefs to create narrowly-targeted exemptions for scientists, engineers and other specialists where the cap might not be enough to access needed skills.

J. David Cox, the president of the American Federation of Government Employees, said the union will work to make sure the cap is applied across all contract types and hopes the new rule will save taxpayer dollars.

“The message is out to the top 1 percent of federal contractors: your license to loot the Treasury is significantly revoked,” Cox said.